[2014-07-04]cryptocoinsnews - How Bitcoin Merchants are Pushing the Price Down

[fryarminer]

http://www.cryptocoinsnews.com/news/bitcoin-merchants-pushing-price/2014/07/04

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

I think that we are waiting for the next phase. This is a necessary phase where people are adopting receiving bitcoin but have no use for it and so convert it straight to dollars. But the phase will come, once bitcoin is more widely accepted, where the bitcoin received will be kept and used as bitcoin - and this is when we will see the value of bitcoin go up.

[justusranvier]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

People need to do their homework a bit more thoroughly.

[cr1776]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

So, usage drives the value down as compared to no one using it?   Seems like the "price model" referenced in the article needs to be improved.

Obviously using bitcoin and not immediately selling them for fiat is better for bitcoin's price in fiat than immediately selling.  However, as compared to no one using it in the first place vs not which is really what the comparison here is, it is not. 

[fryarminer]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

People need to do their homework a bit more thoroughly.

What do you mean? (Sincere question)

[Littleshop]

http://www.cryptocoinsnews.com/news/bitcoin-merchants-pushing-price/2014/07/04

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

I think that we are waiting for the next phase. This is a necessary phase where people are adopting receiving bitcoin but have no use for it and so convert it straight to dollars. But the phase will come, once bitcoin is more widely accepted, where the bitcoin received will be kept and used as bitcoin - and this is when we will see the value of bitcoin go up.

I have said this all along, we now need B2B business payments to scale up.  Suppliers in China being paid with BTC.

[cr1776]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

People need to do their homework a bit more thoroughly.

What do you mean? (Sincere question)

I think he was saying that the premise and the model it was based on - that usage, even converting bitcoin immediately into fiat, drives the price down - was in error.

[hacknoid]

There may be some validity in saying that it is keeping the price from going up as it is providing a source of coins to sell that offsets new purchases.  As stated above, this would only be a temporary step on the road to wide scale adoption, and actually good news - since the price has still managed to go up over the past few months, interspersed with time of relative price stability, it means demand would otherwise be causing the price to continue upwards.   So basically demand is meeting usage, which is significantly up from say a year ago.  All positive signs moving forward!  So yes - we should be cheering on adoption!

[GenTarkin]

You know, I think about this often. While it may be partially true, its not entirely true. I know that if I were to spend some BTC on stuff, I would turn right around and buy that BTC back from fiat.
So, it goes both ways for people, not just 1 way. There are people out there that will keep wanting to use BTC to buy stuff(therefore re buying it as they pay with it)

[PolarPoint]

The writer assumes no one buys bitcoin to pay for their purchases, only those who already owns bitcoin. This is a reasonable assumption. But writer must not forget people will buy the bitcoins back, and those who do not own bitcoin will buy bitcoin now, wait for bitcoin to appreciate and purchase in the future.

[Seldar]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

People need to do their homework a bit more thoroughly.

Yes because except miners who create money, how do customers get their bitcoin? In a potgold?
I want to pay a merchant so I need money : I buy them at an exchange, so BTC price is going up, merchant sell is BTC, price is going down...
In the worst case, nothing changes.

[justusranvier]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

People need to do their homework a bit more thoroughly.

What do you mean? (Sincere question)

I think he was saying that the premise and the model it was based on - that usage, even converting bitcoin immediately into fiat, drives the price down - was in error.

The error is the assumption that every dollar that a merchant receives comes from the exchanges.

There are investors who get their bitcoins indirectly by underwriting payment processors fiat, so in some cases the merchant receiving dollars represents an off-market purchase of Bitcoins by an underwriter.

Maybe you could say this is "driving the price down" because if this route was not available, then the investors would have to purchase on the open market and thus move the exchange rate up, but that's a harder claim to prove.

[fryarminer]

Every time a new business accepts Bitcoin, the community cheers. But they should be sober. Because all those Bitcoins are converted straight into dollars, driving the Bitcoin value down.

People need to do their homework a bit more thoroughly.

What do you mean? (Sincere question)

I think he was saying that the premise and the model it was based on - that usage, even converting bitcoin immediately into fiat, drives the price down - was in error.

The error is the assumption that every dollar that a merchant receives comes from the exchanges.

There are investors who get their bitcoins indirectly by underwriting payment processors fiat, so in some cases the merchant receiving dollars represents an off-market purchase of Bitcoins by an underwriter.

Maybe you could say this is "driving the price down" because if this route was not available, then the investors would have to purchase on the open market and thus move the exchange rate up, but that's a harder claim to prove.

Thanks for the clarification. I did not know about the investors.

[CryptInvest]

The next stage is when people and companies will pay directly Bitcoins. Now, any news that a large and important company ischvestnaya nachiaet accept payments in Bitcoin exchange rate pushes up